Question

There was water damage to personal property in a home. The items damaged were

originally priced at $4000. The items lose value by 11% per year. The items were four years
old when they were damaged. The owner had actual cash value coverage with a deductible
of $250.
How much will the insurance company pay the policy holder?

1. $3600

2. $4000

3. $1990

4. $250​

Answer 1

Your answer should be $1990

Answer 2

The correct answer is option 3. $1990

Step-by-step explanation:

Let's first analyze all the information we have:

We know that the items were originally priced at $ 4,000. With each passing year they lost 11% of their value and 4 years have passed, which leads us to the conclusion that the items lost 44% of their value.

So: (4000 x 44): 100 = 1760

Items are worth $ 1,760 less than before: 4000 -1760 = 2240.

Items now cost $ 2,240. The owner had actual cash value coverage with a deductible of $ 250. That is to say, he must bear this cost, and the rest will be paid by the company. Which brings us to: 2240-250 = 1990.

That is our correct answer.